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It is not fair for people to wait until the final stage to do something about it, as it means that the landlord who has defaulted on their mortgage will rack up more interest costs while the second hearing takes place and that the lender cannot get on with their business. It will also clog up the court system, because instead of one hearing, two will take place. Anything that can be done to try to speed up the process and prevent extra court hearings is a good thing. I am not suggesting that the hon. Gentleman should remove the flexibility in the Bill. All that I urge him to do, either in Committee or on
Report, is consider amendments that make it clearer that if people are aware of the first hearing, they have to act at that stage, and cannot wait until the second stage. We should, however, retain the safeguard that if they are genuinely not aware of the first hearing, they can act later.
Secondly, while I accept what the hon. Gentleman is proposing, I am not entirely sure that the Bill does the job. He said that people can apply for only one two-month delay, and I agree wholeheartedly. However, I am concerned that the Bill does not make that clear.
James Duddridge: I, too, was concerned about that. The hon. Member for Bolton, South-East (Dr. Iddon) discussed the reliance on the words, "a period". By substituting the words "a single period", we would solve the problem, and that might be something that could be considered in Committee to clarify the position.
Philip Davies: My hon. Friend is right, and I agree wholeheartedly. He said that we should use the word, "single", but I suggest that we replace "a" with "one".
Bob Russell: What about "a single one"?
Philip Davies: Perhaps we could combine the great talent on these Benches with that phrase. However, replacing
"a period not exceeding two months"
with "one period not exceeding two months" would put the position beyond doubt. As the provision is currently worded, there is still some doubt, because as long as the period lasts no more than two months, application can be made for more than one delay. The insertion of the word "one" would be extremely helpful, and I genuinely hope that the hon. Member for Bolton, South-East will consider that proposal as the Bill progresses.
Finally, I understand that the Council of Mortgage Lenders has raised the issue of the notice given to the tenant of the hearings. The Bill asks the lender to write to them to explain the process and the fact that there is going to be a possession hearing. My hon. Friend the Member for Rochford and Southend, East (James Duddridge) made it clear that there could be data protection issues, and I think that that may well be the case. I would not want the Bill inadvertently to stumble because it clashed with data protection requirements. The Council of Mortgage Lenders makes a good point in suggesting that it would be helpful if the notice to the tenant of the possession hearing came from the court, rather than from the lender. That would be beneficial for two reasons: first, it might avoid the data protection issues that could make the mortgage lender nervous. Even it were proved that it was not in breach of data protection laws, there might be a slightly chilling effect, as it might avoid doing something because it did not want to risk becoming involved in data protection issues. If the court service sent out the letter, that would certainly help with that problem.
Secondly, such a letter would help to ensure that people are aware of the proceedings that are under way. A letter sent to the tenant by the court would be much more likely to be opened and carefully scrutinised by the recipient than a letter from, perhaps, a mortgage lender with whom the recipient has hitherto had no relationship. Again, I hope the hon. Member for Bolton,
South-East accepts that that provision would in no way affect the terms of his Bill or the purpose behind it. It would not prevent people from solving the problem that they find themselves in, but it would improve the process in the Bill and make it more robust. It would ensure that people who find themselves in a terrible situation through no fault of their own, when they have done absolutely nothing wrong, as when unauthorised tenants are faced with eviction simply because of the relationship between the landlord and the mortgage lender, have the safety net that the hon. Gentleman is trying to provide.
I do not wish to go on, because as my hon. Friend the Member for Rochford and Southend, East said, we have other important business to get through. However, I hope the hon. Member for Bolton, South-East reflects on those points of detail-I consider them points of detail as opposed to points of principle-in our further consideration of the Bill. If we could introduce those minor amendments, we could have a Bill that everybody across the whole industry agrees with, and we could shorten proceedings at future stages of the Bill. Rather than spending time arguing over amendments that I would hope to table on Report, we could move much more quickly and see the Bill become law. I would like it to do so, because it would give important safeguards to people who find themselves in a difficult situation through no fault of their own.
The Bill would be an appropriate legacy for the hon. Member for Bolton, South-East, who has served his constituents and the House with great distinction.
10.42 pm
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Shahid Malik): I want to put on the record the fact that the Government wholeheartedly support the Mortgage Repossessions (Protection of Tenants Etc.) Bill, which has been introduced by my hon. Friend the Member for Bolton, South-East (Dr. Iddon). It would be hard not to support legislation that will help to reduce distress and disruption to households who rent in the private sector. The Bill will make the legal process substantially clearer for those tenants affected. It is positive and constructive and enhances protection for those people who rent privately and whose landlords have not requested or received lender consent to let.
As has been evident in the debate, the issue of short-notice eviction of tenants when their landlord falls into arrears and repossession action starts is by no means straightforward. It is legally complex. The gap in legal protection for tenants faced with that situation is not so much an oversight, but an historical result of myriad housing and mortgage laws pertaining to tenants.
My hon. Friend eloquently explained the problem and proposed a solution, and I do not intend to repeat what he said. However, I will say that it appears a no-brainer that the House should act to ensure that unauthorised private rented sector tenants are offered some form of legal protection. It cannot be right that a tenant enters into a tenancy agreement in good faith, only to discover that the lack of lender consent to let means that in fact they are unauthorised tenants with no rights or protections against the lender.
James Duddridge: The Minister mentions tenants entering into an agreement in good faith, but how about tenants entering into an agreement in bad faith? For example, would it be possible, under the Bill, for an individual who is living in a property and having their property repossessed to take on a tenant in bad faith-perhaps a friend-further to delay the repossession order? I cannot quite see how we would avoid that situation of people taking on tenants in bad faith. If that is not covered, could it be dealt with in Committee?
Mr. Malik: I was going to make precisely the point that the Bill perhaps does not deal with a number of issues that could be addressed in Committee. One thing is clear: the core rationale behind the Bill is shared by all of us. My hon. Friend the Member for Bolton South-East himself said that there was a clear, conscious decision to make the Bill as discrete as possible to ensure its progress. That does not mean, however, that other related matters pertaining to it cannot be dealt with in Committee.
This time last year, the issue of unauthorised tenants affected by lender repossession action against their landlord was beginning to be drawn to public and media attention, for which I would like chiefly to thank the advice sector and organisations such as Shelter, Citizens Advice, Crisis and the Chartered Institute of Housing. I thank those organisations for the time that they spent working on ideas to address the issue, including in the joint report "A private matter?" which was published in March 2009.
Bob Russell: Will the Minister hazard a guess as to why this relatively recent problem has arisen?
Mr. Malik: I am not in the habit of guessing-I will leave that to others, who can do so in Committee.
In fact, the Select Committee on Communities and Local Government was ahead of the organisations I mentioned. A report published on 24 February 2009 identified the issue and called on the Government to produce guidance to stipulate how lenders should act when tenants are discovered in a property that they are repossessing. In addition, the Department for Communities and Local Government ministerial postbag started to receive details of individual cases in which tenants were suffering eviction at very short notice as a result of landlord repossession. Common themes included the lack of information available to the tenant, the complaint that no one would listen to tenants, and tenants' great distress at needing to find an alternative home so abruptly. The hon. Member for Colchester (Bob Russell) alluded to the fact that some tenants find out that a property is being repossessed without being told themselves, which I do not advocate. Clearly, that situation did not seem right and needed investigating. As a result, my right hon. Friend the Member for Derby, South (Margaret Beckett) announced on 13 May 2009 the Government's commitment to legislate at the earliest opportunity to provide better protection for tenants in repossession cases.
As my hon. Friend already mentioned, the Department issued a consultation over the summer, "Lender repossession of residential property: protection of tenants", to which there were more than 30 responses. The responses recognised that short-notice eviction was a very real issue. There was equal recognition that action needed to be taken.
I am pleased that a large number of local authorities responded to the consultation. They were extremely supportive of the need to ensure that tenants in that situation were given adequate notice to find alternative accommodation, and cited recent examples of properties being repossessed when tenants were living there. The problem is real and it has real consequences for people's lives.
It would be remiss of me not to mention the lender sector, which also responded to the consultation document, either directly or via representative bodies such as the Council of Mortgage Lenders, which the hon. Member for Shipley (Philip Davies) mentioned, the Building Societies Association, or the Financing and Leasing Association.
Bob Russell: In those representations, was there any recognition, by any of the money lenders, that they, in part, were responsible for some of the cases because they failed to have due diligence regarding those to whom they were lending money?
Mr. Malik: The honest answer is that I am not aware of that, and I am happy to write to the hon. Gentleman on that point. However, we know that over the past 18 months due diligence has not really been at the forefront of the minds of bankers and financial institutions.
Bob Spink: The Minister mentioned councils and their attitudes when people become homeless. Would he expect a decent council to act with compassion rather than dig its heels in and enforce its statutory powers, especially when the vulnerable person who is facing homelessness-I have in mind a case in Castle Point at the moment-is disabled and has not acted as well as they might have done in responding to the council because of a mental illness or some other problem? In such a case, would the Minister expect a council to be compassionate and do everything that it can to ensure that someone in that vulnerable position is not made homeless?
Mr. Malik: The hon. Gentleman makes a good point. In these difficult times, the Government would expect compassion to be at the forefront of the minds of those in positions of public authority. The Government have made great efforts to ensure that compassion is instituted in several organisations. That is why-the hon. Member for Rochford and Southend, East (James Duddridge) spoke about some of the challenges that exist-the Government introduced the Real Help Now campaign, which is accessible via direct.gov.uk and provides £130 million extra funding for free face-to-face debt advice.
Lenders have also agreed not to repossess for three months while forbearance is discussed. Anyone with problems needs to engage with their lender as soon as possible. They will probably find that lenders are not as eager to repossess as has been assumed. Since April 2008, some 330,000 homeowners have benefited from this Government-initiated help and advice.
James Duddridge:
The consultation is a worthy exercise and I wish to tease out the level of Government involvement. Why, given that the consultation exercise
closed on 14 October, have the Government not yet issued a response? Surely that would have been helpful before today's debate?
Mr. Malik: I am not fully aware of the reasons for that. I hope that I will address some of the issues about which the hon. Gentleman is concerned in my speech, and I will write to him in due course on the consultation.
No lender deliberately intends to evict a tenant from a property against which they are taking repossession action. Many lenders, rightly, are sympathetic when a tenant becomes known to them and engages with them, and they can take account of the tenant's circumstances and allow them a period to find somewhere else to live. That reinforces the point made by the hon. Member for Castle Point (Bob Spink) that compassion is crucial in this matter.
Bob Russell: In one of the cases that I mentioned, compassion was non-existent.
Mr. Malik: Obviously, I am not familiar with the individual case, but we have made our view clear. In difficult times, a decent society would wish to be compassionate to people in difficult circumstances. I am therefore pleased that the Government's interventions and programmes have meant, for example-this is a factual point and not party political-that the number of repossessions is half the rate it was during the last recession. I note the interesting statistic that in 1992 quarter 1 homelessness due to mortgage arrears was running at 12 per cent., but in Q3 of 2009 it was 3 per cent. Intervention helps, and compassion is at the core of that.
Unfortunately, the lender is often unable to help because they are reliant on the tenant making themselves known to them. For obvious reasons, that is not always possible and it can often happen too late in the process. In addition, unless the Bill is enacted, there is currently no official mechanism for tenants to engage with the court repossession process and no opportunity for the judge to take them into account when making a decision on repossession.
The process of lender engagement in this issue tends to be ad hoc and certainly tenant experiences are not universal. Worried and vulnerable tenants need some clarity about the steps that they should take to prevent themselves from being made homeless at short notice. My hon. Friend's Bill would achieve that.
I recognise some of the concerns raised by the lender sector about the Bill in response to the consultation document. While the need for tenants to have some opportunity to engage with the repossession process is key, it is recognised that some lenders feel the Bill to be complex and want to ensure that it is proportionate to the scale of the problem. That is a reassurance that my hon. Friend has been keen to give, and I can assure those stakeholders and the House that the Bill is indeed a proportionate response to the problem, given that it is clear that the various stages can be invoked only by an unauthorised tenant under threat of short-notice eviction as a result of landlord arrears and repossession. I would also argue that a Bill with only two substantive clauses is relatively simple. I understand that the secondary regulations also give further reassurances on processes that the tenant and lender will need to go through.
James Duddridge: I asked about the regulatory impact assessment, although I decided to stay in my place rather than run to the Library to get a copy. Did the Department write or influence the RIA? If so, that would reassure me.
Mr. Malik: I can assure the hon. Gentleman that the Department did all that he would expect to ensure that full support was given to the Bill and to my hon. Friend.
What strikes me most about short-notice eviction is the injustice of it. The majority of private rented sector tenants are good tenants who pay their rent on time. The fact that they may have lived in the property for some time, blissfully unaware that their landlord has any financial concerns until the bailiffs turn up on their doorstep, is shocking. One can only imagine the distress that that causes, not to mention the disruption to normal life and likely financial hardship incurred as a result, through no fault of the tenant at all.
It is unfortunate that owner-occupier landlords, either through inexperience or poor business decisions, get themselves into a mess and are unable to pay their mortgage. Worse still is the worrying number of landlords who do not actually use the rental income received from tenants to service the mortgage debt. It is hard to believe that that is the case, but unfortunately it is too often true.
In endorsing the Bill, the Government are showing our commitment to supporting the professionalism of the private rented sector. I note that the National Landlords Association and the Residential Landlords Association have supported the Bill's objectives. That speaks volumes. Landlord organisations recognise that short-notice eviction of good, rent-paying tenants flies in the face of all the good work that they have been doing to ensure that the private rented sector is a professional and competent one, so that to live in such a home is seen as an active choice rather than a second-rate alternative to social housing or home ownership. The National Landlords Association and the Residential Landlords Association do not want unprofessional landlords operating in the private rented sector any more than tenants do.
The Government stand by my right hon. Friend's commitment to legislate at the earliest opportunity. This Session's timetable has put pressure on the legislative programme. The Bill introduced by my hon. Friend neatly helps the Government to fulfil the commitment made, especially as I can assure the House that it addresses many of the concerns raised by respondents to the Department's consultation.
Proceedings interrupted (Standing Order No. 11(4)).
Personal Statement
11 am
Harry Cohen (Leyton and Wanstead) (Lab): I am here to apologise to the House. I do so without proviso. In my statement to the members of the Standards and Privileges Committee, I said that I would concur with whatever decision was made by them, and I stand by my word. There was no intention of wrongdoing on my part, and I am sorry for my assumption that I was eligible to claim as I did, which was wrong.
I have two further apologies, the first of which is to my constituents. The good people of Leyton and Wanstead do not deserve to have their faith in their parliamentary representative so severely shaken. They deserve the best, untarnished representation. Also, the best of my efforts over the past 27 years has been in taking up their cases, including cases of injustice to them. In the past intensive nine months of the inquiry into me, I have had to give a lot of time to my own case, when I would have much preferred to be dealing with theirs. I am sorry for any shortfall as a result.
Secondly, I publicly apologise to my wife Ellen, who is taking a lot of the flak. This situation is not her fault and she has suffered as a consequence. I am deeply sorry about that.
Finally, I have the greatest respect for Parliament and would not intentionally have wanted to do anything to tarnish its reputation. I am sorry if I have done so.
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